Category Archives: business management

The Inept Organization: Weak Leadership as the Culprit

by James D. Roumeliotis

Embarrasing Moment Photo - Pants down

How often do you come across a company, either as a consumer or at a business relationship level, and realize how frustrating it is to deal with?

To understand and penetrate the corporate governing structure and “culture”, you need look no further than the upper echelon of the hierarchical tree. It is here that procedural decisions are shaped and executed. An entity’s leadership is expected to head the enterprise by governing its long-term growth and sustained wealth.
Moreover, there is a constant search for the “right” human resources. Recruited and fresh talent must resemble the leadership in tone and style. Call it the organization’s DNA. Exceptional organizations are good at these types of corporate strategies, thus strengthening performance effectively.

We notice that in certain types of B2B transactions, there can be scope for unscrupulous behavior. One or both parties are tempted by “disservice” during their business exchange. Shortsightedness might lend itself to make this underhanded approach appear “profitable” on paper. Such relationships inevitably end badly because they are not conceived with trust or respect.

Success Breeds Success

Companies that foster the right attitudes and strategies put the firm on track for success. Examining their corporate histories, you can witness a trajectory of growth. They have a tendency to dominate their markets and “win” through competent talent, innovation, and an entrepreneurial mindset within the leadership at the executive level. These choices underscore the prosperity and rapid growth of the institution. An examination of Alphabet (Google) or Facebook shows this quite nicely. They are not built like “traditional” corporations nor do they act like them.

Organizational leadership is accountable for creating value for customers, employees and its owners/investors. When Bill Gates conceived Microsoft, he put the firm on track for providing constituent audiences with what nobody else could provide. Understanding “asset” management in an expanded meaning of the term guaranteed that Microsoft would succeed under Gates stewardship.

The opposite is equally true. When top executives lack knowledge or experience for board positions, they should not be promoted to these leadership roles. Some family owned firms run afoul here and this brings up the issues of sustainability and corporate governance. Another weakness in running an organization, in my view, is pushing for short-term profitability at the expense of solid planning. For example, with large organizations, competence is not the primary value but rather connections, politics, and clever tactics. Such “benefits” can usually compensate for incompetence.

No business can continue to prosper unless it attracts fresh and eager talent. Despite the dilemmas within the financial world, top organizations consistently lure new talent with lucrative compensation packages. It is easier for a firm such as Goldman to tap the “best” because of its reputation, size and success than a small local financial player. When Goldman recruits they know where to look, whether it is Harvard or the London Business School. Prospects will already contain the seeds of the corporate culture in their past. Given the “right” conditions, new talent blossoms. Qualifications are never enough. They are a starting point reinforced by attitude and values. The selection and screening process is designed by HR to weed out inappropriate candidates.

Established software companies’ interview process include quizzing candidates with challenging technical questions. This practice not only assesses problem-solving and knowledge ability, but also explores the ability to perform under pressure, which is a key skill required for software engineers to succeed in their intense work environment.

One thing is firmly certain ─ the best-managed companies have “one” factor in common:
They are constant achievers in their respective industries. These companies exude managerial excellence. Financial performance is the result of this style of management. Consider companies such as Amazon, Apple and Cisco, among others, which thrive and ranked in 2019 by the Drucker Institute as America’s largest publicly traded companies according to Peter Drucker’s principles of effectiveness—“doing the right things well.

Deeds Not Slogans

Companies with inept leadership usually fail in the first year or two, but even established companies can stumble badly when they outgrow the capabilities of the founding team. Research by the U.S. Bureau of Labor Statistics demonstrates that nearly 6/10 businesses shut down within the first 4 years of operation.

To be a successful entrepreneur is not an effortless task. It takes plenty of sacrifice. A new generation of young entrepreneurs think the road is smooth and a fast track to easy wealth. Not everyone will become Jeff Bezos. Obstacles and sacrifice are part of the deal. Harnessing opportunity and overcoming challenges daily to top the competition is constant work. These conditions are true no matter what the sector of business engagement or company size.

Telltale signs of weak organizations can be traced to inept leadership. The following points highlight the deficiencies:
Poor customer service – slow or no customer inquiry replies – abysmal handling of sales and service complaints. Service is portrayed as a reward, not a right or benefit.
No Unique Selling/Value Proposition – Companies need to define and articulate their unique value proposition and deliver on it consistently. Create the platform for sustainable and competitive advantage.
Operational deficiencies – various ailments and no structure
Absence of or very little communication among staff and management – Divisions aren’t well-coordinated and do not function as a team.
No transparency – There is hardly any openness from management.
Unethical practices – short-term selfish objectives in search of market share. Top executives should promote social norms and principles as moral agents.
Lack of proper execution of decisions and with new products/services.
Productivity incentives should be implemented to boost results and employee morale. People must be given a reason to work hard and be efficient.
Creativity is practically non-existent – An absence of innovation and employee empowerment will hurt progress and stifle new ideas.
No clear vision/strategy – there needs to be a strategic vision that reflects a truly unmet need and has the commitment of a dedicated CEO. That means that there is a well-defined target audience with a distinct value position that is differentiated, meaningful, and deliverable.
A weak sales force along with an unattractive compensation plan.
Favoring nepotism and bias – promoting family members over other qualified employees often leads to resentment or, worse, prompts valuable non-family employees to leave the company.
Poor hiring practices – should hire for attitude and train for skills.
Slow/delayed decision-making process – too many layers – overwhelming bureaucratic structure.
High turnover, which leads to poor employee morale, reduced intellectual capital, lower service levels, higher operational costs and decreased productivity.
Management in a state of denial about their organization’s shortcomings – remaining with the dysfunctional status quo
No specific and/or stable channel strategy – Some companies focus on building a product, but don’t think through how to get it into the hands of customers. Even if your product is great, unless you can sell directly, you may be dead in the water without strong channel partners.
The hidden game – corporate politics – power plays by a handful of individuals for their own benefit to the detriment of their colleagues and the company.
Misrepresentation of brand(s) – too much hype – empty promises – not delivering on expectations – leads to dissatisfied clients who will alienate the brand.
Weak financial controls – cash flow dilemmas – over leveraged/undercapitalized (high debt-to-capital ratio) – not reinvesting a certain percentage of profits for future growth.
Absence of sound marketing program(s) and/or brand strategy – A brand is defined by how it behaves, from the products it builds to how it treats its customers, to the suppliers with whom it works.
Growing too fast and not staying on course as the company grows.
Lack or very little employee training & development.
Deficient in control systems – reactive rather than pro-active.
Lack of continuous improvements or complacent.

Top executives need to be accountable to the ownership or Board of Directors – whichever applies, or at least to an outside arm’s length and neutral party such as an adviser who can also play “devil’s advocate” when necessary.

Good Organizations Matter

The way to solve an organizational problem is to confront the structural issues with a moral sense of purpose and ethics. For its clients to receive stellar service, the firm must have its house in order. Besides structure and an efficient operation, employees should be trained and empowered to do their jobs efficiently.

Seth Godin, a renowned marketing strategist, stated succinctly: “If you want to build a caring organization, you need to fill it with caring people and then get out of their way. When your organization punishes people for caring, don’t be surprised when people stop caring. When you free your employees to act like people (as opposed to cogs in a profit-maximizing efficient machine) then the caring can’t help but happen.”

Companies that disrespect their employees and shut-out clients get willfully isolated and have a short life span through an erosion of market share and significant loss of revenue. A company’s goal should place emphasis on serving its people properly and fairly. Higher morale generates higher profits – though occasionally other priorities hinder that objective, for example, self-serving behavior by certain executives.

Enterprises spanning a wide array of industries, have earned distinction as “well-” or “best-” managed” by demonstrating business excellence through a meticulous and independent process that evaluates their management abilities and practices – by focusing on innovation, continuous training, brainstorming and caring for their employees’ well-being – as well as investing in meeting the needs of their clients.

In a nutshell: Well-run companies thrive no matter what by hiring the right people, taking good care of them, listening to customers and never ceasing to innovate and improve.

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How to Overcome Obstacles in Your Business During and Post Covid-19: Five Steps for Long-term Survival and Effective Results

By James D. Roumeliotis

Superman Businessman

Whether you own a restaurant, retail, manufacturing or in the services domain, each definitely has its own challenges. However, all have similar things in common including protocols that must be implemented to control the spread of the COVID-19 virus, as well as cash flow, customer acquisition and marketing issues to deal with to name a few. COVID-19 is a systemic shock for every company around the world. The pandemic has changed not only economies but consumer behaviors and what customers value and demand moving forward. How should a savvy entrepreneur regain his or her best skills and eloquently move forward?  There are five recommendations which will be addressed below.

The “new” normal or “next” normal

McKinsey & Co., a renowned business consultancy firm, declares that due to the business disruption caused by Covid-19, regardless of industry and sector, it envisions 7 elements which will be crucial in the shaping of the new normal. This includes:

  • Distance (social/physical) is back (technology continues to shrink physical distance, but in other ways, it could be set for a return);
  • Resilience & efficiency (combined – to come out of the crisis better than the competition, as well as the key to survival and long-term prosperity);
  • The rise of the contact-free economy (especially in regards to making payments – but in three areas in particular—digital commerce/e-commerce, telemedicine/virtual health, and automation);
  • More government intervention in the economy (step up to serve, or save, the private sector from economic disaster);
  • More scrutiny for business (with public money offered, there will be real effects on the relations between government and business, and between business and society);
  • Changing industry structures, consumer behavior, market positions, and sector attractiveness (should question whether existing market positions will be ongoing without much effort to reposition and respond to changes confronting various sectors as a whole);
  • Finding the silver linings (an opportunity for some positive outcomes and lessons derived from the coronavirus crisis).

A

Don’t panic, reassess and execute

Preparation, agility and resilience are three key ingredients to weathering any business storm with “Threats” in your SWOT analysis. Although Covid-19 has caused more havoc than anyone would not possibly anticipate, for optimists and the determined, it has offered a silver lining in regards to being much better prepared for almost any other peril which comes along in the future.

Cash flow: Since we know that cash is a crucial aspect of any business, a focus should be on price, volume of products or/and services sold, cost of goods sold (COGS) or cost of services rendered, operational expenses, accounts receivable timing, inventory control and turnover, as well as accounts payable terms and payment timing.

New and refined business model and strategy: Get creative and brainstorm different ways you can readapt your business and still deliver your service and/or products, including methods to boost revenues not considered pre Covid-19. For example, dining restaurants and lounge cafes are operating home-delivery and pick-up, as well as downsizing their seating capacity. Other types of businesses are considering mainly online and considering weekly or monthly subscription-style deals and other incentives helps to stay ahead of the competition.

Execution: Once the viable strategy is in place, implementing it requires several variables including: a) Everyone is onboard and constant communication is key; b) Include a timeline to accomplish the tasks; c) Select which ones will create the greatest impact to the goals of the organization; d) Frequently monitor and evaluate ─ verify progress against plan and make any necessary adjustments if necessary.

Finally, don’t leave any strategic planning elements without clear “action steps.”

Growth and innovation: The successful development and implementation of new ideas and refinements is crucial to a business so as to improve its processes, increase its efficiency, introduce/launch new and improved products and/or services to market, in addition to, improving its profitability. Encouraging and brainstorming new ideas, with all staff involved for maximum feedback, is a savvy consideration. Some ideas to consider are: adapting the business to meet changing customer needs, changes that solicit changes due to a “new” normal, and new, refined or discontinued products and/or service offerings.

Use of technology: More than ever before, exploiting technology at your disposal brings an added advantage in running an efficient business, plus navigate the challenges from the contagion and aid their recovery. Businesses should make a mid to long-term plan on technology and digital strategy. For example, process automation can increase efficiency. There are likely to be more opportunities for companies, among others, in sectors such as remote offices, online education, online medical care and online entertainment. However, adopting new digital or mobile payment methods, earning revenue from online sales and using social media for business purposes should be top of mind.

At the end…

John F. Kennedy once stated that “when written in Chinese, the word ‘crisis’ is composed of two characters. One represents danger and the other represents opportunity.” The assumption is sufficiently genuine: that a calamity presents a choice. This is especially evident today. In business, regardless of industry, alternative yet practical ways to operate exist.

What is for certain, is that the upturn caused by Covid-19 will be a terrific opportunity for growth ─ but only for those who embrace it and make the required and meaningful changes. No one can predict risks such as a pandemic, but it would be foolish to think they, and other types of risks, will not occur and affect them in any way.

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The Authentic Brand: A Precious Asset Developed Through Transparency, Customer Experience and Ultimately, Loyalty

By James D. Roumeliotis

We want transparency in your corporation, not your pants: Why 2013 ...

Trust is a hard thing to come by these days whether between people or between people and brands. When the founders of a start-up build a brand from the ground-up or the executives of an established one are in modus operandi mode, taking a cautious approach to their brand image, in both scenarios, ought to be part of growing and preserving the business with a constant eye on the future.

Sadly, nonsense, and plenty of it from ubiquitous brands, is probably the best noun to describe what consumers are offered by many companies selling their products and services to them. Whether it is advertising, package labeling or an overstated pitch by their sales staff, the information presented may be deliberately misleading. With some brands, it is the tiny print in disclosure statements which defeat what is promised in larger and bold advertising headings. The majority of consumers do not read small footnotes. Think of the worst offenders of this practice: the cellular phone/telecommunication providers, insurance companies, credit card providers, as well as the automobile manufacturer promotional offers and pharmaceutical advertisements – to name a few.

Deception concealed as sincerity: How to chip away at your brand

The key to a successful business growth, along with reputation, is truth in advertising, delivering on promises made, avoiding deceit – and marketing the brand, not the product. Contrary to popular belief, a brand is not a logo, label or product but rather a relationship with customers. It is a promise. Branding, when carefully executed, adds value to a company including brand equity. This is considered intangible brand value. By applying a short-term revenue and profit strategy at the expense of long-term negative consequences, a business’s brand reputation will ultimately lose its luster.

In the 2018 Harris Poll Reputation Quotient®, published the reputations of the 100 most visible companies among the U.S. general public. What appears on the top five, among other notable brands as consumers perceive them, are Wegmans Food Markets, Amazon, Samsung, Costco and Johnson & Johnson respectively.

Consumers have high and explicit expectations from brands, thus anticipate what the brand promises via its marketing material and/or what is stated on the product packaging. What a brand actually delivers and how it behaves in the process is what consumers get to feel.

A brand which utilizes short-term sales and marketing tactics for quick short-term gain fails financially in the long-term by acting in an ethical way. As marketing maven Seth Godin rightfully proclaims, “In virtually every industry, the most trusted brand is the most profitable.” As with our personal lives, trust with branding is based on what one does, not what one says.

Boosting sales and market share via misleading and deceptive tactics

According to a 2018 Harris Poll, regarding the most and least trusted industries, Banks represented 4 of the top 8 companies by trust rating this year, with Supermarkets adding in another two of the top 8. The remaining companies in the top 8 were in the Credit Cards and Insurance industry, such that Supermarkets and Financial Services companies took all of the top 8 spots.

By contrast, TV and Internet Service Providers occupied each of the bottom 4 positions in the rankings, and 7 of the bottom 11 overall.

The food processing domain is no more honest with labels that claim to be healthy but without support with any concrete scientific facts. Food companies tout their devious label claims of organic, nutritious etc. – although an absurd amount of sugar and/or sodium is present in the ingredients along with unnatural artificial ingredients). Kelloggs even went as far as having to be ordered, by the courts, to discontinue all Rice Krispies dubious advertising which claimed to boost a child’s immunity system.

Then there is the “premium” orange juice from popular brands such as Tropicana, Simply Orange and others which are highly processed, and usually stored for several months before reaching consumers at the supermarket fridge aisles. This processing method is used to retain the juice from spoiling. However, during that process, it also strips the flavour which is injected back into the product, once it finally gets packaged, to give the juice its original orange flavour. Not surprisingly, the orange juice producers do not make any reference to this anywhere.

Informative and authentic eye-opener documentaries such as Food Inc. and Tapped have upped the ante in terms of the exposure shared with the public to what is wrong with the food processing/food chain and water bottling sectors respectively. Moreover, the GMO debate with the exceptionally well-connected and deep pocketed Monsanto (the St. Louis-based biotech giant and world’s biggest seed seller) will not be going away any time soon.

Other industries notorious for deceit are banks and cellphone/telecommunication companies with their hidden fees. These blatant revenue generators are sales at any cost – short-term gains, of course. These companies guilty of gouging seem to be testing the limits with consumers – as if the latter are ignorant. Those absurd fees evidently enrage the culprits’ customers.

Employees reflect the brand

First and foremost, trust begins with company employees. If they are well trained and treated with respect and transparency, the employees will trust their employer and radiate their enthusiasm, as well as loyalty to their customers by going the extra mile.

Along with a brand being a valuable asset for any business, people also fit into the equation as an important asset. This is where hiring the right people, on-boarding them, training them adequately and empowering them all create a positive impact on customer satisfaction.

Many brands are myopic to the point that they unintentionally and unknowingly allow their dissatisfied customers to go away without a thought. Front-line staff is either not trained properly and/or lacks the proper attitude to handle clientele appropriately.

During the industrial era, consumers would simply purchase what was produced, shopping where that product was available and paying the price the retailer demanded. In essence, the manufacturer and the store were in position of strength. As products and consumers have changed over the years, the concept of ‘brand loyalty’ and ‘consumer insight’ came about. As we progressed into the new millennium, the transparency and unrestricted information available on the internet has changed all of that. Today consumers are not only better informed but they are also in control. They can make or break a brand through their actions. So what does this say about listening – and acting?

Consumers will no longer refrain from informing companies on what may have gone wrong ─ whether it’s a particular brand or a competitor’s. With the numerous platforms for consumers to make their voices heard online, brands have to be very reactive and not allow anything to chance. In an age when the consumer’s outcries and influences spread quickly, the results can signify lost sales and a deterioration of brand loyalty.

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When all is said and done

Building and nurturing a brand is what makes an enterprise gather wind under its wings. Common intelligence dictates that the way a customer is dealt with reflects on the integrity of the brand, and the image of the company in the mind of the consumer.

A “Brand” is a promise of something that will be delivered by a business. This promise comes in a form of quality, an experience and a certain expectation in the mind of the consumer. It includes the Unique Selling Proposition (USP). Marketing, on the other hand, is about spreading compelling messages to your target audience while branding is a combination of words and action. Marketing is extroverted and communicates quickly, while branding is introverted and a slow process if it’s to produce any real impact. Effective marketing activities are vital in developing a brand. When combined successfully, branding and marketing create and promote value, trust, loyalty and confidence in a company’s image, products and services.

According to an Edelman’s Trust Barometer, it was revealed that 77% of respondents refused to buy products from companies they distrusted. More disturbing is that 72% said they had criticized a distrusted company to a friend or colleague.

When customers are treated with honesty and delighted by a particular brand experience, they begin to bond emotionally with the brand. They become brand loyalists and advocates – buying the brand more often and recommending it to others. This behavior serves to build the brand’s reputation. This approach is priceless –even though it may take longer to take positive effect.

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The Notorious Cruise Industry: A Glorified and Reckless Offshore Business

By James D. Roumeliotis

Hiding from the Cruise ship

According to the Cruise Lines International Association (CLIA), the world’s largest cruise industry trade organization, the industry transported and hosted 30 million passengers in 2019 worth upwards of $117 billion in 2017. Traffic, since 2009, grew from 17.8 million with an annual growth rate of 5.4%.

Cruise ships, prior to the recent coronavirus pandemic, maintained a degree of glamour and opulence. Slick advertising and marketing projected images of fun and carefree times with a glorified onboard experience ─ a floating and carefree hotel resort. However, the dark side is best described as an industry which is rogue, careless along with insensitive behavior in international waters. According to a Conde Nast Traveler article, despite a relatively good safety record, the four most common cruise ship mishaps (icebergs is not one of them) are: Rough waves, storms, fires and collisions.

For the record, as a former yacht and passenger ship broker, who chartered entire ships to VIPs and for corporate events, this author possesses first-hand experience in the industry.

The Good…

To be fair, the safety aspect of passenger ships (specifically for those carrying more than 12  passengers) is regulated by the IMO (International Maritime Organization) and its convention known as SOLAS (Safety of Life at Sea). It regulates basic safety aspects for ships on international voyages such as stability, machinery, electrical installations, fire protection and lifesaving appliances. The main objective of the SOLAS Convention is to specify minimum standards for the construction, equipment and operation of ships. In addition, cruise ships are required to adhere to:

  • MARPOL (short for Maritime Pollution): It is the main international convention aimed at the prevention of pollution from ships caused by operational or accidental causes. It was also adopted at the IMO (International Maritime Organization). For cruise ships it includes pollution by sewage pollution by garbage.
  • Classification Society:  It is a non-governmental organization that establishes and maintains technical standards for the construction and operation of all categories of ships, as well as offshore structures such as an oil platform and offshore platform… in accordance with the published standards. Classification Societies certify that the construction of a ship complies with pertinent standards and perform regular surveys in service to ensure continuing compliance with the mandatory standards. A classification society’s workforce comprises of ship surveyors, mechanical engineers, material engineers, piping engineers, and electrical engineers.

Cruise ship good-ugly montage clips

…The Bad and the Ugly

The best way to describe the typical cruise experience is: cruise ship passengers (or guests as they are normally referred to) get ferried from port-to-port on a floating amusement park. However, as recent events have indicated, cruise ships with their confined spaces and close living quarters are ideal for various diseases including novel viruses such as Covid-19 as they may increase the amount of group contact. In addition, people joining the ship may bring the virus to other passengers and crew. ‘Stranded at sea’: cruise ships around the world are adrift as ports turn them away, read the unflattering headline (March 27, 2020) at The Guardian, an established British daily newspaper.

Passenger ships can also be categorized as high-risk, with excessive sexual assault rates, frequent poisonings, and the ever-present possibility of falling overboard. Cruise ships are also infamous for the environment through their deliberate and/or careless disposal of sewage ─ and air pollution caused by their engines and generators burning away tons of heavy diesel fuel.

Although their head-offices are based in countries such as the U.S., the U.K. and other countries in Europe, cruise lines typically register their ships under so-called “flags of convenience.” The most popular countries with shipping registries include the Bahamas, Panama, Bermuda, Liberia and Malta. Those are chosen for their cheap registration fees, low wages, loose regulations and to take advantage of a taxation loophole that essentially shields them from paying any income tax in the countries the cruise liners are actually based and operate. Although the IMO (International Maritime Organization) makes the international rules that govern shipping, including the sea cruising sector, it has no enforcement power.

As for wages, the stark reality for many cruise ship workers is far from glamour work and pay to match. While the working conditions for officers such as the captain and his lower ranking bridge staff, as well as those working in the shops and casinos are adequate, if not better, the experience of those working in the dining room, in the galley, cleaning rooms, and below deck describes a different story. Those workers are often paid substandard wages, survive on inadequate food, have marginal accommodations ─ and basic medical care for injuries can be scant. Those employees also live under a system that is widespread with abuse and uncertainty. Cruise lines can get away with treating their lowest-paid workers poorly because they recruit them from countries with limited economic opportunities. In other words, people who either don’t know any better and/or see a cruise ship job as a better employment opportunity than what is available in their country.

In March 2019 the cruise ship Viking Sky, with More than 890 people onboard, experienced a loss of engine power off the coast of Norway near Molde. Unable to steer without power, the ship kept getting slammed by extreme waves. Consequently, passengers’ belongings were scattered everywhere in their cabins. The captain declared an emergency. Passengers put on life jackets and went to the muster stations. Eventually, evacuation began. Rescuers worked all night to airlift more than 400 passengers (about half the total) to shore by a fleet of five helicopters flying in the dark, slowly winching people up one-by-one from the heaving ship as the waves crashed and the winds shrieked.  The ship, aided by tow vessels, eventually wobbled into the Norwegian port of Molde freeing the remaining 436 passengers and crew of 458.

In 2013, an engine fire aboard the “Carnival Triumph” left its 4,000 passengers adrift with neither any power, nor running water and scarce food. A year later, Royal Caribbean International was bestowed with the unflattering distinction of breaking the record for the largest number of passengers ill onboard its ship from a norovirus plague — nearly 700 people.

In 2019, the behemoth cruise line Carnival Corporation and its Princess Cruise Lines subsidiary agreed to pay a criminal penalty of $20 million for environmental violations such as dumping plastic waste into the ocean. Princess had previously paid $40 million over other deliberate acts of pollution. Royal Caribbean Cruises, the world’s second largest cruise line, has paid an $18 million fine for illegally dumping a great deal of waste oil and chemicals into U.S. waters from its dry cleaning shops and its printing and photo processing equipment.  Moreover, the crew lied to the U.S. coast guard when asked about the slicks trailing its ships. Other companies have also paid high fines for causing environmental damage.

ONE TIME USE - DO NOT USE

Cruise ships also leave a tremendous amount of environmental footprint. In a year, 100 million gallons of petroleum products from the ships seep into the oceans. Then there’s the air pollution they create. They burn as much fuel as entire small towns and operate on low Sulphur fuel which is 100 times worse than road vehicle diesel.

In June 2019, the 13-deck MSC Opera cruise ship with over 2600 passengers onboard, crashed into a tourist boat and then into a dock in Venice, Italy, due to an engine failure. Video posted to social media showed passengers escaping from the tourist boat and frantically rushing down the dock as the cruise ship swiftly approached them.

Bailout Expectations

Sadly, cruise liners with no obvious plan in place were taken by surprise (reactive vs. proactive). As a result, they mishandled the coronavirus onboard their ships ─ beginning with the outbreak on the Diamond Princess in Yokohama, Japan. Seven hundred people on board were infected with COVID-19 spreading through the ship’s corridors during its two weeks of quarantine, leading to seven deaths. According to passengers aboard the vessels, as well as outcry from health experts, in the weeks following the outbreak major cruise lines missed several opportunities to mitigate the crisis. Furthermore, according to one cruise line spokesperson, to avoid a panic that might collapse the industry, the cruise lines continued to mislead their passengers.

As expected, the news of the Covid-19, especially with many more cruise ships involved, caused a wave of cancellations and stock prices dropped significantly. Shares in Carnival, the world’s largest cruise line with several subsidiary brands in its portfolio, as well as its major competitors Royal Caribbean and Norwegian, have lost more than half of their value thus far this year. To reassure passengers, the Cruise Lines International Association (CLIA), which represents 90 percent of cruise liners worldwide, has issued sweeping restrictions and safety measures to be followed on ships. That reactive approach is too little too late and won’t make much of a difference in terms of reassuring booked passengers and potential ones.

The mere talk to inject billions to prop-up the cruise sector devastated by the pandemic, governments need to take this opportunity to come with strings attached such as implementing provisions, and by creating and enforcing legislation on the cruise ship industry to change its intolerable practices. If the industry along with its annoying lobbyists and greedy executives begin to balk, it will be time to take a hatchet and push the repulsive cruise line operators out to sea. Peter DeFazio, a Democrat in the State of Oregon and chairman of the Transportation Committee, firmly declared that he has no desire to bail-out the cruise industry. “They aren’t American,” he said. “They don’t pay taxes in the United States of America. If they want to re-flag their ships and pay U.S. wages and pay U.S. taxes, then maybe.” Other U.S. House Representatives echoed similar sentiments.

Alas, the mischievous cruise industry (the major ones are Royal CaribbeanCarnival Cruise Lines, and Norwegian Cruise Line Holdings) which insists on self-policing yet retains many holes in regulation and insulates itself by registering its ships in foreign countries (i.e. “Flags of convenience”).  Add to that its powerful lobby (spend approximately $3 M annually on lobbying) in the nation’s capital along with strong influence mainly in the tourism-dependent state of Florida.

In the End

The cruise industry has few fans at this time with many more losing interest. In addition, the elderly, are especially steering away of such voyages ─ perhaps for good. According to the Cruise Lines International Association (CLIA) Global Passenger Report, the median age has been between 60 and 69-year-olds, with a full 19% of cruisers falling under this demographic.

The only exception to the cruise industry worth applauding, with its premium ships, sustainable and exceptional consistent experiences, are the small luxury cruise vessels or boutique ships ─ many which resemble a yacht-like intimate atmosphere with accommodations for between 50 and 600 or so passengers along with a one-to-one ratio of crew members to passengers. Some top rated examples include Ponant Yacht Cruises & Expeditions, Variety Cruises, Seadream Yacht Club, Windstar Cruises, Silversea, Seabourn, and the recent newcomer RitzCarlton with its first-ever yacht christened Evrima accommodating up to 289 guests.

Disappointing pictures of what the mainstream massive cruise ships actually look like in the real world (glamour vs. reality) can be viewed at this link.

For all known illness outbreaks and additional unique news on cruise ships, refer to Cruise Junkie, an online information resource which tracks disasters at sea on the website based on news, passenger, and official accounts.

A full documentary of the cruise ship industry gone awry is linked here.

Finally, for some satire about the cruise industry by HBO comedian Bill Maher, click here for the link to the segment.

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Operating a Restaurant: How to Tackle the Challenges Effectively

By James D. Roumeliotis

Restauarant Operations Image

Whether you are considering starting or purchasing an existing restaurant or a turn-key national banner version known as a franchise, regardless whether a fast food, casual dining or fine dining, food service is a brutal business to get involved with which also requires long hours at the helm. There are many variables to contend with, let alone the primary one…staffing. What will make the operation additionally challenging is the lack of food service and/or hospitality experience. The food service business is quite competitive as you have to attract customers to dine and enjoy at your place more than they do in others restaurants so as to retain them.

From concept to reality and beyond

First and foremost, no one should consider embarking in the food service business, unless the person is a passionate about the business and a foodie. Once immersed, what is the business’s raison d’etre…its mission? The number one goal shouldn’t be profit. There are various types of restaurant concepts to consider. These include: 

  • Fast food;
  • Fast casual dining such as a café and a pub or a family style dining;
  • An upscale dining establishment;
  • Food trucks;
  • Open diverse portfolio of restaurants and/or bars in several strategic partnerships with hotels/resorts including event spaces.

Launching a restaurant methodically is crucial if it’s to succeed and survive in the long run. A study by Cornell University estimates that 60% of restaurants are closed in the first year.

One important factor is choosing the location wisely. This plays a pivotal role in your restaurant’s traffic and revenue achievements. An easily accessible area that is visible to the customers helps draw in customers with less effort. However, it begins with proper market research prior to finalizing the choice of location. The location should not only rely on the local community for diners. It should become a destination. That will be accomplished more by excellent reviews and word-of-mouth, with great food and commitment to service.

Operating a restaurant is difficult physically and emotionally, but especially in the beginning. It is also financially challenging. In a start-up, a good chunk of capital goes most into leasehold improvements, as well as equipment and furnishing. On-going expenses incurred include various fixed (rent, staff salary) and variable costs such as utilities, food ingredients, beverages, supplies and much more. Watching yields and food costs optimize margins to reduce these costs, though, without compromising on the quality of the food service offered. Strict fiscal discipline should be practiced and staff well trained to assist in this all important endeavor. Along with food cost, payroll costs should be carefully scrutinized with timely adjustments in staffing made taking into consideration the days and times of traffic patterns (peak and non-peak hours) but without compromising service. It’s a delicate balance to deal with. With inventory, a list of fast and slow moving food items should be well noted so as not to overstock any rarely used ingredients and other stocked items. Supplier payment terms or COD, with attractive discounts, should be taken into account for additional savings.

Expectations should be clearly communicated, following through and being organized are additional restaurant secrets to success. In addition, having systems in place for everything and continually enforcing them. Most importantly, adequate cash flow, the lifeblood of any business.

Management/Ownership and Staffing: Culture and value

A multi-talented ownership is imperative. If, for example, there are solely two partners, one should complement the other with one looking after the kitchen, while the other works in the dining room, acting as the Maître D and making certain food is properly and timely served. If there is no partner with much kitchen experience, one ought to be hired, paid well (perhaps offer some shares for loyalty). The menu should be creative and frequently updated.

Regardless if the food, decor and seating arrangement are impressive, it’s the staff that complete the entire dining experience. Hire for attitude and train for additional skills necessary to make a positive impact on the customers and colleagues alike. Front-line staff, must be courteous and dressed, as well as look impressive. Moreover, proper onboarding and frequent training of staff is a worthwhile investment. This should include a clear list of duties and instructions for each activity, educating staff to make the guests feel welcome through a polite behavior, neat dressing, and to know how to handle minor customer complaints, such as a soiled napkin or dirty glass, without always seeking management intervention.

Management should intervene when a customer is not happy with his or her dining experience. Displeasure may have been made on the spot, through a feedback form, or a negative review posted on social media. In those instances, addressing the issue(s) promptly can be done by actually speaking with the customer and getting to the bottom of his or her grievance(s) including apologizing and rectifying the missteps immediately. Compensation may include waiving off the bill, offering a free meal on the next visit, and/or sending a bouquet of roses or a box of chocolates.

Embracing Technology and Social Media

At this day and age, food service owners/managers should integrate their restaurant with technology if to remain on the top and run a successful operation. Expected by many clientele, this includes online reservations, available and complimentary Wi-Fi, and online/mobile ordering and payment or at least accepting orders via food delivery app services such as Uber Eats and Grubhub.

Today, every restaurant and bar should possess and fully utilize a POS (Restaurant Management System). It’s the hub of the business as it handles orders, tracks payments and cash flow, manages inventory, and provides robust reporting to assist in making decisions for front and back of house (i.e. kitchen). The POS is packed with data such as sales metrics, reports on the hours your staff have worked, and inventory counts. Knowing how to interpret this POS data, along with the powerful insights within it, can help make better, more informed business decisions for the restaurant. Furthermore, the system can and should integrated with accounting software, such as Quickbooks, a merchant payment system like Chase, and reservations systems such as OpenTable to name a few.

Along with a memorable name and attractive logo, a strong social media presence is more important than ever before. Prospective and existing guests use it before they decide where to dine as they want to see the food and much more before.  The look and ambiance of the restaurant should be “Instagrammable,” whether it’s a piece of decor or a place setting. It should catch the eye and look interesting.

Restaurants Highest Costs

In the final analysis

Be your own best critic. Never take anything for granted. Just step into the shoes of customers. Due to possible bias, invite mystery customers to do incognito visits and have a trusting third party do occasional audits of your books. You never know what may be uncovered.

To operate a business successfully, strategic and methodical steps should be in place. Rather than view and approach it merely as a family business, the food establishment should be run professionally like a lean corporate business entity.

A good and busy location, preferably with available parking should be well thought-out, as should well trained staff with a pleasant attitude and dress code. A talented chef and a creative menu will undoubtedly satisfy diners’ taste buds.

Finally, cash flow is king. Without it, financial issues can arise affecting the overall business achievements, but most importantly, its survival.

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EIGHT Crucial Questions Aspiring Entrepreneurs Should Be Asking Prior to Launching

By James D. Roumeliotis

Image result for male and female entrepreneur

Potential entrepreneurs and inventors are individuals motivated primarily by the desire to create something new, the desire for autonomy, and financial independence who are equally convinced that their product or service idea possesses tremendous potential. However, without a structure in place and vital concerns to honestly deliberate, as well as confront, the prospective entrepreneur may be diving into an unfamiliar commitment prematurely.

Asking the right questions to prepare the road map ahead, along with predicting the worst-case scenarios, will place the aspiring businessperson in a superior proactive rather than in a totally capricious and reactive position.

As a serial entrepreneur stretching over 35 years and in three countries, I have developed a series of questions to asses prior to engaging in a new enterprise. The self-evaluation questions which should be addressed are as follows:

1)      Will my product or service idea be viable, and does it solve a problem?

  • Do an adequate/in-depth research of your target market(s) and your competition (if any).
  • Know your potential size of your target market(s).
  • Be familiar with your USP (Unique Selling Proposition). Can you articulate
  • Establish a business model to identify the products or services the business will sell (whether B2C, B2B or both), and among other elements to ponder such as the target market it has identified, and the expenses it anticipates.
  • If what you are planning to offer is considered disruptive and will make people’s lives easier, than your chances of acceptance and sales will be significantly higher than the average existing competition.

2)      Do I have adequate funding to launch it and keep the business going?

  • There should be sufficient start-up funds, as well as funding available to keep the business active for cash-flow purposes, as well as to grow the company. Every type of business has different funding requirements.
  • Sources of funding are bootstrapping/own funds, debt (line of credit, credit cards, traditional and alternative bank loans) and/or equity (friends, family, potential investors, etc.)

3)      Do I possess the characteristics required to deal with entrepreneurial            hardships?

  • An effective businessperson has an inquiring mind and should never stop learning. Familiarize himself or herself with the barriers and challenges an entrepreneur is often confronted with.
  • Possess tenacity and able to think clearly. Intense emotions from pressure should be restrained. Cool heads prevail and easier to undertake problems.
  • Organizational skills are critical along with an open mind and fiscal discipline.
  • Should not feel uneasy delegating tedious tasks (whether in-house or outsourced) and focusing on the core business operations.

4)      How much do I know about the industry I’m seeking to embark in?

A clear understanding of the business is imperative. The entrepreneur should be a perpetual student of the business and constantly seeking ways to innovate and improve oneself and the operations.

5)      Can I succinctly address all 4P’s of marketing (a.k.a “the marketing mix”) for the product(s) or service(s) I desire launching?

Every entrepreneur should be familiar with the marketing mix (Product, Price, Place & Promotion) and how each one applies to his or her product(s) or service(s).

6)      What are my financial projections (3 to 5 years)?

  • Achievable? Adequate? What about profit and cash flow?
  • Number of employees planning to hire (payroll costs), amount needed to spend on R&D, equipment, etc.

7)      What is my exit strategy?     

a) If things go awry.

An entrepreneur should know when to walk away if his or her business is floundering with little chance of turning it around. Perhaps sell it if someone else can salvage it. It is not a good idea to keep injecting good money after bad.

b) If the business is thriving in 5-7 years?

It may be a good time to pass on the reins to a capable family member, sell the shares to the partner(s), go public, or negotiate a buy-out from an established brand or competitor. If seeking funds from an Angel Investor or Venture Capital firm, this will need to be addressed.

8)   Do I have a circle of outside support such as a mentor/coach, attorney, accountant etc.?

A savvy businessperson surrounds himself or herself with mentors and knowledgeable advisors, who will nurture the executive to become a better and successful entrepreneur.

Ultimately

The aspiring businessperson should be honest with himself or herself of the challenges that lurk in launching and operating an enterprise — it is not all rosy and glory. Start-ups do not occur in theory. These questions, when answered wisely and truthfully, ensure the would-be entrepreneur does not get caught in a sensual dream that turns into a living nightmare.

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Preparing a Business Plan for its Applicable Audience: Bank, Investor or Other

By James D. Roumeliotis

Business Plan Image 2

Often, the initial task expected from an aspiring entrepreneur is to prepare a business plan. A comprehensive business plan, when concisely written, is a tool that conveys in detail the short and mid-term (1 to 5 years) goals and objectives comprising the projected sales strategies, the marketing, operational and financial plans. This document should include in-depth research conducted regarding the industry and the competition. Moreover, it describes the strengths, weaknesses, opportunities and threats/risks (known as a SWOT assessment) along with a financial analysis, and assumptions on growth. The average 25-50 page document also lays out a map of where your company will be and how it will get there – also known as the “vision.”

Pitch Deck vs Business Model vs Business Plan

A typical question normally asked is: which one comes first? It depends on which of the three is being requested. However, the pitch deck is generally sent early in the discussion. The business model is created for internal purposes and can be comprised within the business plan. The U.S. Small Business Administration (SBA) refers to the business model as “a company’s foundation and the business plan as its structure. The foundation, or business model, is the original idea for your business and a general description of how it functions. The structure, or business plan, elaborates on the details of your business idea.”

Artizan Fine Foods Pitch Deck Cover

A pitch deck is a presentation − a deck of between 10 to 20 pages slides that is shared to potential investors and/or used as a visual during a live presentation to either investors or other audiences. The pitch deck is an effective summary of the key items in the business plan and includes information about the business, who it serves and why, the size of the market, the unique selling proposition (USP) and how the business will win in that space. It also lays-out the details about what the entrepreneur intends on doing with the funds sought from an investor.

The pitch deck is created in a Microsoft Powerpoint format and converted to PDF prior to being sent-out via email.

Business Model Canvas Explanation

The business model, more specifically, a Business Model Canvas is a company’s plan for making a profit − a design for the successful operation of a business. It’s how you create value/make money while delivering products or services to your customers.  It’s in a form of a visual chart with nine building blocks describing, among other elements, a business’s value proposition, infrastructure, customers and finances. It can be used to understand your own business model or that of a competitor. The business model canvas was created by Alexander Osterwalder, of Strategyzer.

Business Plan Content - Sections - Image

The business plan is a non-static document (usually in MS WORD and sent in a PDF format) which describes in detail, what the business does, and how it’s going to achieve its goals and objectives. It also incorporates the business model, the financial projections, and all other details about customer interaction/engagement, customer service, operations including management capabilities.

The business plan is first and foremost used by a business as a reference guide and shared when requested by the bank for a possible loan and/or funding considered by the potential investor.

What a banker or private lender seeks

For debt financing, which is either provided by a bank or an alternative loan source, the business plan should contain a convincing reason why the money is needed and how it is going to be used in the business. Being the least risk adverse, as compared to an equity investor, a money lender’s main concern is the possibility of a business failure/bankruptcy. Its main focus is on the ability to make the loan payments and eventually repay the entire loan. As such, much emphasis is on the cash-flow analysis. Likewise, bankers are interested in the business background of the management team. The marketing plan provides information on how the business plans to cope with competition.

A lender’s additional information sought is other sources of finance the business presently has in its books along with a list of potential collateral which the bank can have readily access to (business and personal assets), in case the business is unable to repay the loan. Likewise, the borrower’s financial track record is carefully evaluated.

What an investor seeks

When writing a business plan specifically to raise capital to fund a new business or take an existing company to the next growth stage, an Investor — whether an angel investor, private equity or venture capital, seeks certain vital information and requirements. The business plan should include a detailed use of funds, a descriptive growth strategy, a list and profile of the competent management team, and credible, reasonable yet ambitious financial projections. An Investor will also look for a unique competitive advantage that enables the business to be more effective than its competitors, as well as whether the business will be making a profit and how long it may take to do so.  The business plan should also state an exit strategy since the investor needs to know how quickly he or she will achieve any gains on his or her investment.

Other specific uses of a business plan

Immigration officials (referring to U.S. & Canada) require those applying for an Entrepreneur or Investor visa to submit a business plan which states that the proposed business has the potential to create the required number of jobs (economic benefits for the country) to qualify him or her for business related immigration visa. Furthermore, the business is being invested meets the monetary requirements and is irrevocably committed (wire transfers, cancelled money orders etc.), an itemized list of goods and materials purchased for the start-up, as well as the lease agreement. The source of funds must be stated, as well as convincing information on the ability to develop and operate the business.

A Government agency may request the business plan to issue a grant. One of the components that simply must be present in the plan is to show that, as the business owner, you are investing your own money. The bureaucrat wants to know that there will be skin in the game. Additionally, what needs to be in the business plan to increase the chances of receiving a grant is how much money is sought, how the funds will be used  and how soon required (perhaps include a timeline). The plan must be written in a form which takes into account the economic benefits for a legitimate and viable business.

A Strategic Business Plan differs from other business plans as it exclusively centers around on the company’s vision and places emphasis on a particular objective. For example, to focus on a particular niche in the marketplace. What would follow is to makes sales, marketing and customer strategy more effective.

What follows is an ideal description and comparison, from the BDC (Business Development Bank of Canada), between the Business Plan and Strategic Plan.

Business Plan. Strategic plan. There’s a lot of overlap between the two, but there are also some crucial differences you should understand.

A business plan answers “what do I want to do?” questions. It includes your company’s organizational structure, marketing plan and financial projections. Its purpose is to define where you want to take your business. It’s often the founding document of a new business.

A strategic plan, on the other hand, answers “how will I do it?” questions. It includes a detailed action plan for the next few years to achieve your company’s goals.

Both should include a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) and be reviewed regularly so that they’re up to date.

In the final analysis

In essence, the business plan is a document not solely for the entrepreneur to spell out strategy and to implement it. Its purpose is also to make a pitch to a banker, potential investor, and prospective partner, or for other (rare) purposes such as immigration. As such, the information should be tailored to what is sought by the specific reader. It ought to provide clarity of thought and purpose, by clarifying strategy, introduce the Business Model, the company, its “raison d’être”, as well as the management team.  It attempts to persuade investors in raising funds, as well as honestly highlighting risks and challenges. The business plan serves as an entry point for further discussions. Besides the management team and its competencies, banks are concerned that their loan gets repaid at a defined point in time so they place emphasis on the projected cash flow statement. An equity investor prefers a business plan which is realistic yet ambitious, their focus being on growth, a return which will yield at least a 10x return on their investment along with an exit strategy in approximately five to seven years.

Key Elements of a Business Plan:

  • Explain the business model in simple terms;
  • Fit the plan to the company;
  • Be credible and informative;
  • Demonstration of knowledge of the market and competitors;
  • Stressing the risks and steps to overcome the risks;
  • Using clear and concise language.

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I deliver comprehensive Strategic Business Plans, Market & Industry Analysis, Marketing Strategies, and Business Models that get your business going and growing. Quick turnaround time and assistance with executing plan (optional). Contact me here.

In addition, I offer alternative working capital (minimum $5000 and six months in business)  based on your cash flow and receivables…not your personal credit score. Upon approval, funds deposited within 48 hours. You may fill-out this online form: https://armanikhoury.typeform.com/to/OBrv5r

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Starting a Business is a Relentless Mission: The Pitfalls of an Entrepreneur

By James D. Roumeliotis

Businessman Taking the Plunge

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Starting a business, most notably for first timers, whether as a sole proprietor/solo-preneur, in a partnership or purchasing a system called a “franchise”, appears to be something many aspire to do. You can’t blame them since they equate this undertaking to creative freedom and profit with no ceiling together with a lifestyle unmatched compared to working for someone else. However, the same number of prospective entrepreneurs may be blindsided by the undertakings required launching a business, let alone operating it successfully.

Drawbacks of launching an enterprise

Contrary to all the hype you read about the dream of starting a business which supposedly guarantees success, reality is quite the contrary. The odds are stacked against the average new entrepreneur (and seasoned ones with a reduced chance of failure due to prior experience). Ahead of embarking on the entrepreneurial path, factors to seriously consider are as follows:

  • Risk exposure especially financial: Even with proper planning to reduce the level of risk, you can’t control the outcome especially if the circumstances are unforeseen. The capital injection which any type of business requires, may not be adequate but also totally at risk. Beyond this, entrepreneurs need to consider the risk from employee disagreements, product liability, and regulatory requirements among other issues. Obtaining financing is also a challenge as banks require some revenue history and guarantees from the owner(s). Personal credit cards, savings, investments, as well as from family and friends are usually the only means of securing funding for a start-up. Borrowing against personal assets, such as a home creates risking the equity in one’s home. This is a financial commitment not all entrepreneurs are willing to make.
  • Uncertainty: Although the business may be successful at the start, external factors such as competition, downturns in the economy, or shifts in consumer demand may impede businesses growth. No amount of pre-planning can anticipate or control such external factors. Profits are not a guarantee during the initial two years either.
  • Time commitment and patience. When launching a business, chances are most, if not all tasks will be performed by the entrepreneur. Responsibilities include everything from purchasing to expenses, marketing activities, customer issues, equipment breakdowns and banking. This would entail working more than the typical 40 hours normally performed when working as an employee for someone else.  This time commitment can place a burden on family and friends and add to the stress of launching a new business venture. Moreover, the business may not be able to support a salary during the initial few months or longer.

Image result for disadvantages of starting a business

In addition, if you decide to take on a partner or two, be prepared to live with the consequences. It is a “business” marriage. In fact, you will be spending more time with this person than with your significant other. Do a thorough due diligence and make certain of the three most important factors.

  • Is he or she should be financially sound? No exceptions, otherwise, it may create issues moving forward including you having to foot the bill for the business’s financial obligations and possibly any future capital injections required.
  • That he or she is not carrying baggage: Make sure they have a good reputation. Not bringing along any legal or financial obligations (such as a bankruptcy or owe a significant amount of money to any parties).
  • Bring value-add such as a talent, strength that will make a vital contribution and compliment the work you do. You can’t possibly be good at doing everything. Ideally, each partner should contribute on an equal footing.
  • When you feel comfortable bringing the chosen partner onboard, do not waste any precious time drafting a legal partnership agreement/ (a shareholder’s agreement in a corporate structure). That is your partnership insurance policy – your business prenuptial agreement of sorts.

Why businesses fail?

New businesses, regardless of industry, have the odds stacked against when it comes to survival rates. According to the Small Business Administration (SBA), “About half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firm’s age.Those survival rates have remained constant over time. That’s why it’s so important to understand how and where things go wrong—such information offers valuable lessons on what to avoid. There are many reasons, perhaps a combination of two or more. The following charts depict the main causes of small business start-up failure. Both, under-funded or well funded business have their reasons for failure – neither is immuned.

Business_Model_Fail_1

Business_Model_Fail_4

In the end

The advantages of staring a business are freedom, personal satisfaction and financial rewards. However, the downside is risking your funds and money obtained from other sources, the possibility that the business can fail, handling many roles with full responsibility, dealing with challenges head-on, and less quality time to spend with family and friends. With limited resources at your disposal, all these factors create stress not necessarily dealt with as an employee.

From the moment you have made the decision to go all in and plant for your start-up launch and throughout your daily operations, your full-time committed is crucial if you seek the desired results. If you fail because of internal factors alone, you have no one else to blame but yourself. At worst you will have given yourself the opportunity to test yourself as an entrepreneur and learned from that experience. Better yet, learn from other entrepreneurs’ mistakes. At the end of the day, “Failure is knowledge, knowledge is success.” – Tim Gibson

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Business Vitality presentation: Preventing adversities before they occur

Business Vitality Presentation

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Unconscious Corporate Leadership: Short-term results-oriented mindset and strategy with negative consequences

By James D. Roumeliotis

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When you are the top executive of a corporation, you are supposedly quite conscious of your business activities. You are also the chief strategic planner and implementer. The path you take the company through can be one the consumer and public in large will either admire and respect or despise and hold in contempt. Good news! A business can do good for the consumer and the ecological footprint while growing the business and increasing profits methodically. A savvy businessperson and executive know how to do this. A disgraceful and incompetent one either has no clue, does not care, or both.

Small to medium sized businesses owned by a person or a family, often since decades, keep seriously in consideration their business and its reputation as their personal honor. They think long term. Unfortunately, at many big companies, such as publicly traded automobile manufacturers, emphasis is mainly on satisfying shareholders through quarterly share prices…whether organically or artificially. Most of the time it’s the latter growth. That’s tremendous pressure on everyone at the helm.

Despicable companies: Prime examples that make you cringe

  • The Boeing brand reputation bruise following its sprint to launch the 737 Max 8 & 9 commercial passenger jets despite its safety and design flaws.

Following two air fatalities in a short period of time along with constant denials and lack of responsibility by Boeing,  the aircraft manufacturer with pedigree finally admitted its shortcomings of its newest passenger jet.  The company should have known better. They rushed to launch the 737 Max due to competitive pressures. Armchair public people think it was a software problem. It was beyond that. It is a structural problem that affects flight dynamics. Both the center of gravity and the mass moment of inertia (in engineering lingo) are too far forward. This causes the nose to dive. The MCAS is just a make-shift for the problem. A single reliable measurement and display of Angle of Attack (AOA) sensor rather than typically two was an additional negligence on the part of the design. Last but not least, the lack of training and written Airplane Flight Manual (AFM) instructions, along with an unproven useless hazardous algorithm, compounded the risks.

This pragmatic author’s take on this one is; Boycott this jet indefinitely. First and foremost for your safety and second, to make a bold statement that the way the whole matter was handled is despicable for the brand whose paramount responsibility is passenger and crew safety.

Unfortunately, many organizations fall victim to ineptness that Boeing did.

  • Why do you think a company which hires and contracts missionaries changed its name from Blackwater to XE, and then Academi? According to source Wikipedia, “Academi is an American private military company founded in 1997 by former Navy SEAL officer Erik Prince as Blackwater, renamed as Xe Services in 2009 and now known as Academi since 2011 after the company was acquired by a group of private investors. The company received widespread notoriety in 2007, when a group of its employees were convicted of killing 14 Iraqi civilians in Nisour Square, Baghdad for which four guards were convicted in a U.S. court.” Quite the business to aspire to operating. Imagine the amount of exposure to liabilities. How well does Erik Prince, its founder and strategist sleep at night? Not caring a whit as long as he is increasing his wealth, that’s what matters to a sociopath.
  • Monsanto, the company everyone loves to hate (except for its enablers). For some decades, the crop chemical company produced and profited from the chemicals that caused destruction, wiping out millions of species by spreading poisonous agrichemicals, destroying our fragile ecosystems, poisoning our soils and entire web of life, undermining every aspect of our lives for financial profit. It also made users vulnerable to the lethal cancerous ingredients. Monsanto is better known as the company which introduced the GMO on your plate, as well as for the popular weed killer herbicide The Monsanto Bayer merger is a great brand strategy for Monsanto. Destructive conglomerates marry each other. However, “Bayer [does] significantly better public-relations work than Monsanto, but that’s it,” contends Antonius Michelmann, CEO of the Coalition against BAYER-Dangers. “Both, Monsanto and Bayer are poisoning and immediately endangering animals, plants and human life. Both care just about profits and nothing else.” Much said!
  • Johnson & Johnson (J&J), the drug giant, known for its baby products, was accused of deceptive marketing conspiracy, by the State of Oklahoma, to drive up sales of its powerful opioid Duragesic painkillers. The state is claiming that J&J worked to aggressively promote opioids to people who did not need the drugs so as to compete with Purdue Pharma. J&J deliberately ignored warnings about addiction and death.

According to Anti-Media, a non-partisan, anti-establishment news publisher and crowd-curated media aggregator, compiled a list with the 10 worst food companies, with genetically modified faux food. The top five (quoted from the source) are:

#1 ConAgra: Their family of brands include Hunt’s, Marie Callender’s, Orville Redenbacher and many others. The compony was found guilty of “health code violations and bacterial contaminations at its food processing facilities, which have endangered consumers and in some cases been linked to deaths.” They’ve also concealed the use of GMOs in their products and practice unethical factory-farm sourcing.

#2 General Mills: Trisodium Phosphate (also known as TSP) is an additive and flavor enhancer found in thousands of frozen and processed foods, including kids’ cereals. It also happens to be an ingredient that was used in industrial cleaners

#3 Kraft Foods: Their Mac N’ Cheese has a golden looking tone to it thanks to  the artificial coloring agent Yellow No. 6 which it uses. However, it has been linked to hyperactivity, asthma, skin conditions and unsurprisingly even cancer. In 2013, following intense pressure, the toxic food company finally removed the artificial coloring. Kraft also hides the presence of GMOs in their foods

#4 Heinz: It merged with Kraft Foods in 2013 (bought by Warren Buffett’s Berkshire Hathaway and the private equity firm 3G Capital). Both brands instantly became partners in food crime for the sake of cost cutting and higher profits yet at the health detriment of their customers at the kitchen table. What Brazilian 3G Capital has purchased (past and present), it turned into disasters with its aggressive at-any-cost cutting. Speaks volumes of the people pulling the reins at the very top. It doesn’t take a psychotropic individual or anyone with an MBA to simply cost cut to increase profit. Anyone can do that. However, it take a contriver with humility and with a long-term view to increase sales and profit more cleverly.

#5 Campbell’s Soup Company: The brand has been sued for hiding the presence of GMOs and for labeling foods as low-sodium when they contain as much salt as regular products. The average cup of Campbell’s soup contains a staggering 850mg of sodium. Unless that’s your only major meal of the day, consuming it means you’re risking heart attacks, diabetes and high blood pressure. Just as importantly, if not more so, is the fact that for many decades, Campbell’s has lined its epoxy-resin cans with the toxic chemical, bisphenol A (BPA). “BPA has been linked in lab studies to breast and prostate cancer, infertility, early puberty in girls, type-2 diabetes, obesity, and attention deficit hyperactivity disorder,” according to Breastcancerfund.org. Only recently did the company finally bow to pressure and phase BPA out of its production.

Other repulsive processed food and beverage culprits on the list (in chronological order), which shouldn’t be raising any eyebrows, include Coca Cola, Nestlé, Kellogg’s, PepsiCo and Hershey’s.

The only method the above brands are responding to their sliding market share, revenues and much more is by utilizing their available cash to purchase health food and functional beverage young companies. These ships are too big to change course despite their plethora of resources.

Seems it is a prerequisite for success that an established food company ought to actively lie to their customers to retain and perhaps grow their business. That worked in the short term.

Here is something off the beaten path compared to the above businesses but with a huge eye sore in terms of their business practices. True story. An American tourist from NY, during his stay on a popular seaside oyster bar on the Greek island of Mykonos in May 2019, paid 836 Euros (about 938 USD) for Calamari (fried squid), a bottled waters, and a couple of beers. Following this outcome, the tourist trap had a slew of complaints and dreadful reviews on Tripadvisor.
Read at this link: https://www.tripadvisor.com/ShowUserReviews-g659660-d129913…

However, the unmoved owner justified his reasons with audacity. The business will surely not remain open for much longer, thanks to short-sightedness. At this day and age…most notably due to the powerful influence of social media, this business practice will not survive for too long.

How to focus on conscious leadership

Typically, private and family remodeling business in various industries put their name on and behind the business. With privately held companies, they are in no pressure to dumb down the products to calm down investor impatience. Instead, companies such as British company Dyson with its dynamic team of engineers do what companies, private or public, should always be doing: innovating with practical new products and refining existing ones.

It is very common in popular culture to see business owners as greedy, selfish, revenues and profit at any cost with no regard for employees or customers. However, this usually applies to public companies who simply bow to their shareholder expectations. A business should be viewed as a sacred obligation to employees, customers, suppliers and everyone who is directly or indirectly impacted the business and its executives. The internal culture is one which ensures the customers are given superb value and great customer service, and by going to great lengths to ensure employees are well taken care of. In addition, treating all vendors, suppliers, service companies, etc. with respect. While our business directly impacts the lives of several hundred people it indirectly impacts the livelihood of several thousand. Therefore, it is critical that  high standards are maintained as the cost of negligence or failure is too high. Money can be earned doing things with conscience…it may take longer but the impact will remain positive and sustainable.

Sadly, the fabric of today’s corporate world is dominated by considerations on shareholder returns at the detriment to innovation, goodwill, reputation, customer service and quality products. The conscious captains of industries are the heroes. Few and far between.

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How to Blemish Your Brand and Lose Market Share Due to Short-foresightedness: The Trouble with Major Food Brands

By James D. Roumeliotis

Nestle

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Yours truly, who took the audacious dive into the functional food and beverage business as a start-up and has presently taken it into the early stage phase, is having a field day reading about the challenges and frequent plethora of lawsuits brought about by consumers who have had enough of the deceit of the major food and beverage brands.

Once upon a time, during previous generations, renowned household brands such as Kraft, Kellogg’s, Pepsi Co. and General Mills, among many others, who once dominated the supermarket shelves along with loyalty.  Today, through their complacency and/or (as public companies) continuous pressure for quarterly sales and profit results mount, as well as through their cunning practices, we notice a backlash from food shoppers – most notably the more health conscious and finicky Millennials.

What Gives in the New Normal?

Today, consumers are more health conscious. This justifies the constant and extensive growth and popularity of the organic, non-GMO, clean label, plant based, farm-to-table and gluten-free product offerings. A large percentage of food producers of products in those categories are the small and nimble new kids on the block. They have hit hard on the established brands who are scrambling to adjust to this new reality.

Despite their vast resources and capital at their disposal, as large ships, they are not able to swiftly make the necessary reformulations or to introduce a healthier fare. As a result, the pressure from the unceasing decline of their revenues and market share are leaving them with no choice but to react, rather than be proactive.  Their path to least resistance is to acquire small health food and functional beverage brands in large numbers to compensate for their short-foresightedness.

The Permanent Health Craze

Hasty and reactive decisions, conniving strategy and foolish leadership have come back to bite them – serves them right. Use of inexpensive and toxic ingredients to engineer taste profiles and in some cases, make the products addictive, some of which include refined grains, MSG, artificial colors and flavors, high fructose corn syrup, Carrageenan and the other artificial and unfavorable which most of us have a difficult time pronouncing. Add to this GMO corn, soy and…well you get it.  More expensive and healthier options can be used but their fiscal paranoia signifies to them this will hurt their bottom line. The big brands avoid raising prices to compensate for more expensive natural ingredients despite research showing that consumers are willing to pay more for healthier choices.

Lawsuits Galore

The cause of distrust among consumers can be rationalized due to corporations misleading the public as a whole, since most of those public food producers are, first and foremost, accountable to heir shareholders. Deliberate misleading information by food producers in regard to nutritional benefits is akin to the nickel-and-diming by airlines, hotels and banks. But unlike the latter list, when it pertains to food, it is considered more critical as our health is at stake.

As a result, in the last few years, there have been frequent class action lawsuits against food and beverage companies. Everything from Non-GMO claims and the use of a better-for-you sounding ingredient such as “evaporated cane juice” rather than using the simple term “sugar” (one and the same). Such negligence and deceptive practices have made the established food brands vulnerable.

According to a Forbes August 2017 article by John O’Brien, titled “Food Companies Beware: Class Action Attorneys Aren’t Slowing Down”, it describes that  “Plaintiffs attorneys who target food and beverage companies with class action lawsuits are showing no signs of slowing down, according to analysis from international law firm Perkins Coie that also shows California’s lawyers are the most active.” Some of those lawsuits include consumers claiming they were misled into buying the product due to mislabeling.

Here is a small sample list of the shameful established food and beverage brands (click for the link to lawsuit article) with seemingly dysfunctional and old school strategies. They have become a favorite punch bag from the likes of this author along with numerous consumer groups and their hired attorneys.

Why Brand Image and Loyalty Matter

A “Brand” is a promise of something that will be delivered by a business. This promise comes in a form of quality, an experience and a certain expectation in the mind of the consumer. It includes the Unique Selling Proposition (USP). Marketing, on the other hand, is about spreading compelling messages to your target audience while branding is a combination of words and action. Marketing is extroverted and communicates quickly, while branding is introverted and a slow process if it’s to produce any real impact. Effective marketing activities are vital in developing a brand. When combined successfully, branding and marketing create and promote value, trust, loyalty and confidence in a company’s image, products and services.

According to an Edelman’s Trust Barometer, it was revealed that 77% of respondents refused to buy products from companies they distrusted. More disturbing is that 72% said they had criticized a distrusted company to a friend or colleague.

When customers are treated with honesty and delighted by a particular brand experience, they begin to bond emotionally with the brand. They become brand loyalists and advocates – buying the brand more often and recommending it to others. This behavior serves to build the brand’s reputation. This approach is priceless –even though it may take longer to take positive effect.

Brand reputation quote from Benjamin Franklin

Customers first, employees second — investors/shareholders third

In the ivory towers of public corporations, the CEO and board of directors have been programmed to put their stakeholders best interests above all else. Their mission is to do what it reasonably takes to deliver quarterly results ─ in other words, to focus on the short term rather than sow the seeds and do what is most beneficial for the future direction of the company ─ despite any short-term pains. Savvy and considerate top management know better that customers and employees are the two key drivers of corporate success.  The main principle is that if employees have a positive attitude, are passionate, well trained and competent, results will be reflected through positive customer experiences resulting in brand loyalty. Ultimately, the shareholders will reap the benefits through stock performance and generous dividend distributions.

Large well-established companies have several advantages over smaller ones mainly due to their imposing size, their brand recognition as well as for their plethora of cash and human capital. However, despite their deep pockets and plethora of resources, they are risk adverse, bureaucratic in their decision-making process and to some extent, disengaged from their customers. Moreover, if they are a public company, their initial allegiance is to their shareholders.

Start-ups and smaller businesses, on the other hand, have less money and resources at their disposal to grow or even compete in the unapologetic and competitive landscape. Yet, the small business is agile, nimble and creative and possess several advantages such as a clean slate, rather than the baggage many large corporations have been carrying over the years, as well as perceived as more trusting by consumers, further engaged with their customers, and a refreshing alternative to the established brands – provided the products offer unique and attractive characteristics.

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Small Brands vs Big Brands in the CPG Space: How to Cleverly Outdo the Complacent Mammoth

By James D. Roumeliotis

Sumo wrestler being pushed.

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Using the CPG (Consumer Packaged Goods) brands as the main topic for reference in this editorial, we dig into the dilemmas of the leading consumer brands such as Kellogg’s, Nestle and General Mills to name a few in the food sector.

Small, nimble and niche brands, most notably start-ups, are beginning to chip away at the market share of many leading consumer goods firms. As a result, these small companies are growing rapidly to the detriment of the big brands but to the benefit of the consumers. This has to do with big brand complacency, bullying and arrogance along with the desperate need for short-term results to satisfy the insatiable expectation their shareholders’ have for quick profit and stock price increases – but with little regard for today’s consumer. As such, it is no surprise that shoppers have become more savvy, see through much of the nonsense and have helped turn this tide whereby. Consumers trust and are more confident with the small brands over the traditional ones their parents were accustomed to.

Welcome to the new generation of CPG choices and mentality.

Big ship vs Fast Craft

Large well-established companies have several advantages over smaller ones mainly due to their imposing size, their brand recognition as well as for their plethora of cash and human capital. However, despite their deep pockets and plethora of resources, they are risk adverse, bureaucratic in their decision-making process and to some extent, disengaged from their customers. Moreover, if they are a public company, their initial allegiance is to their shareholders.

Start-ups and smaller businesses, on the other hand, have less money and resources at their disposal to grow or even compete in the unapologetic and competitive landscape. Yet, the small business is agile, nimble and creative and possess several advantages such as a clean slate, rather than the baggage many large corporations have been carrying over the years, as well as perceived as more trusting by consumers, further engaged with their customers, and a refreshing alternative to the established brands – provided the products offer unique and attractive characteristics.

Be First, Different & Daring

It takes methodical strategic maneuvers and innovation to outdo the established ones. The good news is that many small companies seem to be doing a good job at both. As a result, they are becoming quite appealing by both consumers and the large brands respectively. At some point and under certain criteria, the latter are keen to purchase the small niche companies.

A case in point is the state of the exploding snack bars health food category. According to Euromonitor International, a market research and analysis firm, renowned food companies such as Kellogg’s and General Mills are experiencing declining market share as compared to previous years. Meantime, privately held Clif Bar, gained a one percentage point during the same period, while another small competitor, Kind LLC, increased its share by 2.1 points. Not idly standing by, last year, Kellogg’s purchased seven-year-old RXBar for a whopping $600 Million, while Mondelez International, the food conglomerate, which owns the Oreo brand of cookies and Cadbury chocolate, purchased Enjoy Life, a consumer packaged goods upstart which performed three years of 40 percent consistent annual growth. A 2015 report from Fortune magazine found that in 2014, in a single year alone, major CPG brands lost $4 billion in market share.

Reputation seems to be the culprit for this significant market share loss. Consumers perceive products from large brands as unsustainable, as well as less healthy with inferior and artificial ingredients along with a high content of sugar and salt. Younger generations of consumers are also suspicious of major corporations. For example, a 2015 study, conducted by the research firm Mintel, indicates that 43 percent of millennials do not trust traditional food companies.

The single most important advice here is that newly established brands should focus on their unique strengths to win over their large and deep pocketed competition rather than trying to go head-to-head with them. Newcomers to the CPG market are in a better position than large brands in catering to emerging consumer trends such as “clean label”, “free from” and organic/non-GMO foods.

  • Agility

Being a small company give you the benefit of being nimble and efficient in areas large ship like companies are not able to do so. This makes them slower to respond. In fact, there are times that they don’t even return calls or email inquiries. Strat-ups can implement a business model which provides value to customers while simultaneously building a lean operation which will yield a consistent profit. This can be accomplished with a limited financial capacity.

  • USP with a Niche Focus

Unlike the big companies, smaller ones can develop products which meet an unmet need. A niche market can demand a premium price which can yield respect along with a handsome profit. For large companies to offer niche product may risk cannibalizing their own existing products.

Increasingly, mass-market retailers are seeking niche brands that their clients consider as healthier. This will keep their customers from purchasing products in this category elsewhere as these large mainstream food retailers face rising competition from natural food and specialty chains such as Whole Foods Market and Trader Joe’s.

  • Trust and Transparency

Regrettably, established food companies do not practice what they state over their PR megaphones. A recent Forbes article contends, those large brands mislead consumers by giving an impression of a healthy product through their misleading labels. Consumers today are well informed and can recognize inauthentic brands, but it seems that short-cuts and short-term thinking, in the name of profit margins and increasing share prices, take precedence. According to AdAge, consumers are increasingly switching to smaller CPG companies as they are perceived as healthier and more authentic.

  • Media Spend on a Budget: Creative vs. Outspending

With a limited marketing budget, the most effective methods of reaching your target audience and to out-create your large corporate competitors is through social media, including reaching out to influential bloggers with a large audience, coupled with a select number of sponsorships and the use exposure of marketing posters, brochures etc. for maximum exposure.  The key to compelling content is to make it about your niche and  your story. If you sell good quality products and have managed to build a good online network of brand supporters, you can leverage your goodwill to bring in sizeable sales.

In a Nutshell

As change is and should be constant, the small brands should not only learn from all the mistakes made by the big brands but also offer what the consumer demands…clean ingredients, transparency and personality along with a story and an emotional connection. These elements exude confidence and trust. Moreover, smaller companies should remain nimble, use plenty of experiential marketing and continuously offer timely improvements including environmental sustainability.

Established brands please take note as you are on notice.

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Shady and Dysfunctional Enterprises: Deceit, Greed and Short-sightedness in the Name of Profit and Market Share

by James D. Roumeliotis

Dysfunctional Company Hierarchy

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Businesses of all sizes normally develop various pain points. A seasoned entrepreneur has actually made a list of 100. In the end, pain is a motivator for action to turn things around. However, the key is in how to tackle each one and in a timely manner. Better yet, how many of them are ever anticipated — and as a consequence solutions readily available? What is not anticipated are repercussions from poor decisions made or deceit deliberately caused with or without knowledge from company authorities. As a result, denial sets in from the top with accountability being dismissed.

Needless to say, chaos reigns within organizations which for many results in bleak outcomes. Within, there is a lack of communication, trust, transparency and loyalty. Not a sincere and astute way to operate a business.

By all appearances, there are plenty of executives who are simply results driven at the expense of their customers, employees as well as with their vendor relationships. Remarkably, most of those companies are publicly traded.

Corporations lack trust from consumers

A survey conducted by JUST Capital’s of more than 40,000 U.S. participants and groups indicates that the nation’s largest corporations are “going in the wrong direction.”

Overall, only 41 percent of all Americans trust corporations “somewhat” or “a great deal,” while 50 percent of more conservative Americans trust corporations.

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Source: http://justcapital.com/research

The cause of distrust among consumers can be rationalized due to corporations misleading the public as a whole, as well as their shareholders. Deliberate misleading information by food producers in regards to nutritional benefits and nickel-and-diming by airlines, hotels and banks are causes for frustration, suspicion and loathing.

Sectors notorious for constant price gouging coupled with despicable service include, but not limited to, a select number of pharmaceutical brands, banking/financial services, cellphone service providers, cable companies, large food brands and airlines. Too add salt to injury, in the U.S. and Canada, pointless aggressive lobbying efforts by various industries yield their influence by means of generous contributions to political parties. They are also infamous for spending a ludicrous amount of money producing sly ads and propaganda which go against consumer wishes. Consider the soda lobbyists who, according to a NY Times article, “made campaign contributions to local politicians and staged rallies, with help from allies like the Teamsters union and local bottling companies. To burnish its image, the industry donated $10 million to the Children’s Hospital of Philadelphia.” Sadly for consumers and the city of Philadelphia, the tactics worked. Similar outcomes occurred in New York City and San Francisco. In the end, the soda industry’s rubbish of an astonishingly high calibre, comes as it does from the same producers of fatty chips to the semi-literate masses. Shameful practices include the deceitful marketing of chemically-calibrated and engineered to simply taste good processed food products that are making its mainstream market obese, thus unhealthy.

In certain types of large scale B2B transactions, there can be scope for unscrupulous behavior. One or both parties are tempted to forego ethics in favor of making the deal. Such relationships inevitably end badly because they are either uncovered by authorities, as well as not conceived with trust or respect.

Then there are the occasional devious companies that will do what it takes in the name of revenue and profit ─ disregarding authorities, customers and everyone who takes their trust for granted. Volkswagen’s blatant rigging of emissions tests with over 11 million of its diesel cars sold globally, 482,000 of which are VW and Audi brand cars in the U.S., is an ideal case in point. As a result of its mischievousness, the company known for its hard core corporate culture caused a great deal of damage to the environment. Their supposed clean diesel models have been spewing up to 40 times more smog-causing nitrogen oxide pollution. The recall is one example of a deliberate act gone terribly awry for a brand which wholeheartedly masterminded it with self-admission. Rather than sacking the CEO Martin Winterkorn, under whose watch this scandal occurred, and depriving him of his golden parachute, the supervisory board allowed the septuagenarian, Mr. Winterkom, to conveniently step down and take home a lucrative compensation package.

contact this author for his pragmatic and practical approach.>

Corporate governance or lack thereof

The term “Best practices” is not merely words but deeds. What is required is an efficient implementation of strategies, quality controls and delivering more than lip-service. Evidently, it is not easy, otherwise, many more businesses would be performing admirably.

To understand and penetrate the corporate governing structure and “culture”, you need look no further than the upper echelon of the hierarchical tree. It is where procedural decisions are shaped and executed. One would think and expect an entity’s leadership to head the enterprise by governing its long-term growth and sustained wealth. Conversely, there is a constant search for the “ideal” human resources. Recruited and fresh talent must resemble the leadership in tone and style. Call it the organization’s DNA. Exceptional organizations are good at these types of corporate strategies, thus strengthening performance effectively.

In the end, leadership ought to foresee and prevent any potential scandals, apply checks in balances, inspect what is expected, keep corporate structure layers to a minimum, and keep communication channels open.

Customers first, employees second — investors third

In the ivory towers of public corporations, the CEO and board of directors have been programmed to put their stakeholders best interests above all else. Their mission is to do what it reasonably takes to deliver quarterly results ─ in other words, to focus on the short term rather than sow the seeds and do what is most beneficial for the future direction of the company ─ despite any short term pains. Savvy and considerate top management know better that customers and employees are the two key drivers of corporate success.  The main principle is that if employees have a positive attitude, are passionate, well trained and competent, results will be reflected through positive customer experiences resulting in brand loyalty. Ultimately, the shareholders will reap the benefits through stock performance and generous dividend distributions.

Jack Ma, the founder and executive chairman of Alibaba Group, a family of highly successful Chinese Internet-based businesses, made a public statement which may have surprised the investment community. He publicly stated that, “Our customers come first, our employees second, and our shareholders third.”  The highly regarded membership-only warehouse club COSTCO performs actions consistent with one’s claims as they too follow Jack Ma’s mantra. The impressive financial results year after year speak volumes as they retain the best intentions of their employees and customers.

It took Amazon quite long to finally earn a profit since its inception. Founder Jeff Bezos and his senior executive team dug in their heels despite outcries from many of their shareholders for continuously making large capital investments with no profits in sight. For a while, plenty of cash was spent for IT related infrastructure including Cloud computing and everything related to giving the company an edge over the competition. Customer service and the customer experience have been priority no. 1. In the end, shareholders who lingered learned that patience with their investment in Amazon is a virtue in the long run.

The attitude of the individuals in the boardroom had better be that if investors are impatient and eager for quick monetary results, they can take their money and invest it elsewhere.

Advice for start-ups: ‘Steady as she goes’

A well-oiled operation should consistently head steadily on its current course regardless of any obstacles that get in its way.

Research by the U.S. Bureau of Labor Statistics reveals that nearly six out of 10 businesses shut down within the first four years of operation.

To be a successful entrepreneur is not an effortless task. It takes plenty of sacrifice. A new generation of young entrepreneurs think the road is smooth and a fast track to easy wealth. Not everyone will become Mark Zuckerberg. Obstacles and sacrifice are part of the deal. Harnessing opportunity and overcoming challenges on a daily basis to top the competition is constant work. These conditions are true no matter what the sector of business engagement or company size.

Telltale signs of weak organizations can be traced to inept leadership. The following points highlight the deficiencies:

  • Poor customer service – slow or no customer inquiry replies – abysmal handling of sales and service complaints. Service is portrayed as a reward, not a right or benefit.
  • No Unique Selling/Value Proposition. Companies need to define and articulate their unique value proposition and deliver on it consistently. Create the platform for sustainable and competitive advantage.
  • Operational deficiencies – various ailments and no structure
  • Absence of or very little communication among staff and management. Divisions aren’t well-coordinated and do not function as a team.
  • No transparency. There is hardly any openness from management.
  • Unethical practices – short-term selfish objectives in search of market share. Top executives should promote social norms and principles as moral agents.
  • Lack of proper execution of decisions and with new products/services.
  • Productivity incentives should be implemented to boost results and employee morale. People must be given a reason to work hard and be efficient.
  • Creativity is practically non-existent. An absence of innovation and employee empowerment will hurt progress and stifle new ideas.
  • No clear vision/strategy – there needs to be a strategic vision that reflects a truly unmet need and has the commitment of a dedicated CEO. That means that there is a well-defined target audience with a distinct value position that is differentiated, meaningful, and deliverable.
  • A weak sales force along with an unattractive compensation plan.
  • Favoring nepotism and bias – promoting family members over other qualified employees often leads to resentment or, worse, prompts valuable non-family employees to leave the company.
  • Poor hiring practices – should hire for attitude and train for skills.
  • Slow/delayed decision-making process – too many layers – overwhelming bureaucratic structure.
  • High turnover, which leads to poor employee morale, reduced intellectual capital, lower service levels, higher operational costs and decreased productivity.
  • Management in a state of denial about their organization’s shortcomings – remaining with the dysfunctional status quo
  • No channel strategy. Some companies focus on building a product, but don’t think through how to get it into the hands of customers. Even if your product is great, unless you can sell directly, you may be dead in the water without strong channel partners.
  • The hidden game – corporate politics – power plays by a handful of individuals for their own benefit to the detriment of their colleagues and the company.
  • Misrepresentation of brand(s) – too much hype – empty promises – not delivering on expectations – leads to dissatisfied clients who will alienate the brand.
  • Weak financial controls – cash flow dilemmas – over leveraged/undercapitalized (high debt-to-capital ratio) – not reinvesting a certain percentage of profits for future growth.
  • Absence of sound marketing program(s) and/or brand strategy. A brand is defined by how it behaves, from the products it builds to how it treats its customers, to the suppliers with whom it works.
  • Growing too fast and not staying on course as the company grows.
  • Lack or very little employee training & development.
  • Deficient in control systems – reactive rather than pro-active.
  • Lack of continuous improvements or complacent.

In the final analysis

In large corporations, the Boards should be held more accountable by paying closer attention to the behavior and actions in the C-suite ‒ thus reacting before things go awry.

The top executive’s job is to operate a business that adds value by means of the goods and services it provides to customers.

The way to solve an organizational problem is to confront the structural issues with a moral sense of purpose and ethics. Higher morale generates higher profits – though occasionally other priorities undermine that objective, for example, self-serving behavior by certain executives or chasing short-term selfish objectives in search of rapid market share, profits and self-interests before people. Monsanto’s executive conduct would make for a marvelous case study in this regard.

According to marketing maven Seth Godin, “It’s the flameouts and the scams that get all the publicity, but it’s the long-term commitment that pays off.”

Wish list of best practices should include but not limited to:

  • avoid potential scandals;
  • apply checks in balances in place;
  • inspect what is expected;
  • trust but verify;
  • retain corporate structure layers to a minimum, and
  • keep communication channels open.

In the end, what you manage and how you manage it is what you get — methodical, sustained growth with patience and lack of greed.

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The Hiring Conundrum: How to Correctly Employ Talent

By James D. Roumeliotis

Job Candidates

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How often do we hear employers, of all sizes, complaining that there is a dire shortage of good talent out there? What should we really make of this? Is there anyone to blame – everyone but the employers themselves? Consider the daily hiring procedures and habits of most employers to realize who is at fault for the hiring dilemma. Engaging prospective employees by utilizing mainly the human resources staff and/or relying solely on a plethora of job boards, automated hiring/”big data” or software to scan and screen-out resumes is not only irresponsible but rather a wasteful practice, totally impersonal, as well as a thoughtless and a lazy way to bring, supposed, qualified people on board.

Through third parties and automated systems, how is a hiring manager going to discover candidates who bring more than just skills to the table – ones who also bring about an ideal attitude and character? Think soft skills/emotional IQ. The job of hiring should be conducted by none other than the person to whom the potential new employee will be reporting to – or rather be assigned with tasks.

If there is a list of ideal and practical methods of properly hiring employees, which I fully subscribe to, then you ought to read the article “How To Hire: 8 stunning tips“ in Nick Corcodilos’s blog “Ask The Headhunter®.”

Here is the link: http://www.asktheheadhunter.com/10693/how-to-hire

Eavesdropper next table

Keep Your Recruiting Radar Constantly Active

Recruiting done properly and effectively is not an occasional task but an on-going process. Potential candidates can be discovered anywhere. Even if the hiring manager is not actively seeking a candidate, he or she should be doing so proactively by keeping his or her ears and eyes open at all time and literally anywhere – whether during networking, social activities, or during his or her time off. I am aware of two such cases; whereby a business owner and a recruiter, respectively, both came across their potential candidate while dining at a restaurant. In either case, they were impressed when they overheard an individual, at the table beside them, talking about his/her career goals and aspirations. The pleasant personality and discussion drew them in impressive ways that the hiring managers could not help but engage with this person. In the end, the eavesdroppers extended the individual an invitation for a job interview. Eventually, they were hired by their respective employers.

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The Top 10 Most Read Articles in this Blog for 2015

by James D. Roumeliotis

Top 10 Articles for 2015

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As in every year, I have once again rounded up the ten most read/popular articles — this time for  2015. The following ten captured the most attention by numbers and from 154 countries in all. See them all below in descending order.  Your views are always encouraged including subject matter you think I should be covering more of.

THANK YOU for your readership and I look forward to feeding your mind with much more business practical food for thought this year which can be applied for timely results.

1 Luxury vs. Premium vs. Fashion: Clarifying the Disparity

2 Perceived Quality: Why Brands Are Intangible

3 The Art of Selling Luxury Products: Brand Story Telling & Persuasion

4 Mass Customization & Personalization: The Pinnacle of Differentiation and Brand Loyalty

5 Exceeding the Hotel Guest Experience: Anticipating and Executing Desires Flawlessly

6 Brand Awareness: the influence in consumers’ purchasing decisions

7 The Ultra Luxury Purveyors: Lessons from brands catering to the richest 1 percent

8 Identifying and Catering to the Discerning Consumer: Quality and Service Above All

9 Start-up Essentials: A Universal Roadmap for Starting a Business — Infographic

10 Product Features vs Benefits: The Brand Differentiation

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Effective Leadership: How to Optimize the Decision Making Process

by James D. Roumeliotis

Maze and Businessman

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Face it! Like it or not you are defined by the decisions you make. Think of successful organizations and the people responsible for guiding their authority and well-being. Often, high performance is the result of an executive choosing the right move at the right time. It’s not purely a lucky streak. Corporate strategy is not “Black Jack” nor 5-card stud poker.

Decision-making is a complex activity and at times a long process. Your ability to identify and excel in your decision-making tasks will greatly increase the chances that the choices you make will have a strong and positive impact on your organization. Why take any additional risks when you know instinctively that this is the case to sound growth and prosperity?

Where to begin in contemplation

Your first step is to understand the external and internal factors that affect decision-making, from aspects of the organizational environment to your personal decision-making preferences. While you aren’t always able to control these influences, recognizing and identifying these factors will enable you to take them into consideration as you strive to achieve the best decision outcome.

Reality check

Every day you make sense of what goes on around you by interpreting what you see and hear, taking into account your past experiences, values, needs, attitudes, and goals. Even your understanding of what another person says is only an estimate, as you can never completely share the viewpoint of someone else concerning the world.

Given the increasing complexity of organizational life, along with the quantity of information that must be processed, it is no wonder executives too often experience stress as they strive to balance agendas and please many of their people.

It can happen that you put a lot of time and effort into a decision study or a formal analysis, only to be disappointed in the results. When this happens, you need to re-evaluate both the information that went into the analysis including your expectations.

On the one hand, no process is any better than the information that goes into it and when you get a result that your experience suggests may be flawed or biased, this is a strong indication to probe.

On the other hand, it’s extremely tempting to tinker with the data until you receive a result that you’re happier with ─ but this is a form of deception that can lead to an adverse outcome. In this case, it helps to remind yourself to maintain a high standard of accuracy and objectivity and to seek a reality check from someone whose judgment you respect and who’s not personally involved in the decision.

The decisions you make are only as good as the process you use to make them. Asking yourself the following questions will help you to assess whether or not you are on the right track:

  1. Have I done adequate research and gathered all of the appropriate information for the subject matter at hand?
  2. Have I considered all of the stakeholders and their probable responses to various decision outcomes?
  3. Have I been honest in assessing my own decision making style and taken that into account?
  4. Have I recognized and acknowledged my personal agendas and bias?
  5. Have I considered the various options available to me in selecting the most appropriate decision making method?
  6. Have I solicited the advice and assistance that was required?
  7. Am I prepared to be accountable for the consequences of the decisions I make?

You have the responsibility for making decisions that deeply affect your employees’ performance, morale and your organization’s future. You cannot afford to rely on personal preferences or hunches alone.

Now that you are familiar with some practical, yet highly effective approaches offered here, your challenge is to develop a positive future possible through the decisions that you make today.

Business man confused with his good and bad conscience

Business man confused with his good and bad conscience

Bottom line

Your decisions are only as good as the information you use to make them. The cliché “Garbage in, garbage out” applies here. Your ability to recognize bias and evaluate the reliability and validity of the information you gather can make a tremendous difference in the effectiveness of your decisions.

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Business Vitality: Preventing Adversities Before They Occur

by James D. Roumeliotis

Businessman with telescope

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“Panic” and “chaos” are not what one should undergo in business. Unfortunately, many entrepreneurs are caught off guard more often than necessary when operating their business. In his book “The E-Myth Revisited”, dynamic author Michael Gerber states that a business person ought to work “on” his/her business, rather than “in” his/her business.

Start-ups have a leg-up if they launch and persevere on the “right track.” The appropriate definition of these two words together imply following a proper course of action. The analogy which can be applied to a business well-being is our own personal state of formidable health comprising of a healthy diet, frequent exercise and undergoing an annual physical. The objective is to be proactive, rather than reactive.

Remaining diligent and active as opposed to reactive

Entrepreneurs may be quite well versed with the products and/or services offered, but not necessarily with running their business including a bucket list of daily administrative tasks. Most notably, sales, marketing and finance/accounting undertakings. This is where honest consideration should be given in either bringing in a partner to complement the entrepreneur’s weaknesses or an external adviser and/or mentor to guide him/her. A sounding board should not be dismissed as prohibitive, thus solely for larger organizations. Seeking professional help is an important way to avoid or plan for business challenges.

Moreover, when drafting a business plan as the road-map, include a SWOT (Strengths, Weaknesses, Opportunities & Threats) matrix and “what if” scenarios — which will reveal and prepare one in avoiding the pitfalls of running a business, as well as coping with various challenges which can arise. In addition, consider plotting a business model as a prelude to the business plan. It makes you think through your business plan, which in turn communicates the business model. Both should synchronize. Make certain a short term (less than 12 months), medium term (13-30 month), as well as a long-term plan (30-60 month) have been conceived.

Savvy business people – whether new or seasoned entrepreneurs or CEOs of large corporations possess:

  • Insight and foresight;
  • Strategies and execution competence;
  • Alternative plans with an exit strategy in case situations turn awry;
  • The perception to take “calculated” risks rather than dive into the abyss;
  • Openness to third party advice;
  • Focus and consistency to achieve their goals and objectives;
  • The ability to see opportunity before their competition does and act upon it in a timely manner.

Negligence with current enterprises

Growing pains in any organization require a formidable administration to keep the business operating efficiently which includes customer front & center, profitability and more than adequate cash flow. Telltale signs of weak organizations can be traced to inept leadership. The following points highlight the deficiencies:

  • Poor customer service – slow or no customer inquiry replies – abysmal handling of sales and service complaints. Service is portrayed as a reward, not a right or benefit.
  • No Unique Selling/Value Proposition. Companies need to define and articulate their unique value proposition and deliver on it consistently. Create the platform for sustainable and competitive advantage.
  • Operational deficiencies – various ailments and no structure
  • Absence of or very little communication amongst staff and management. Divisions aren’t well-coordinated and do not function as a team.
  • No transparency. There is hardly any openness from management.
  • Unethical practices – short-term selfish objectives in search of market share. Top executives should promote social norms and principles as moral agents.
  • Lack of proper execution of decisions and with new products/services.
  • Productivity incentives should be implemented to boost results and employee morale. People must be given a reason to work hard and be efficient.
  • Creativity is practically non-existent. An absence of innovation and employee empowerment will hurt progress and stifle new ideas.
  • No clear vision/strategy – there needs to be a strategic vision that reflects a truly unmet need and has the commitment of a dedicated CEO. That means that there is a well-defined target audience with a distinct value position that is differentiated, meaningful, and deliverable.
  • A weak sales force along with an unattractive compensation plan.
  • Favoring nepotism and bias – promoting family members over other qualified employees often leads to resentment or, worse, prompts valuable non-family employees to leave the company.
  • Poor hiring practices – should hire for attitude and train for skills.
  • Slow/delayed decision-making process – too many layers – overwhelming bureaucratic structure.
  • High turnover, which leads to poor employee morale, reduced intellectual capital, lower service levels, higher operational costs and decreased productivity.
  • Management in a state of denial about their organization’s shortcomings – remaining with the dysfunctional status quo.
  • No channel strategy. Some companies focus on building a product, but don’t think through how to get it into the hands of customers. Even if your product is great, unless you can sell directly, you may be dead in the water without strong channel partners.
  • The hidden game – corporate politics – power plays by a handful of individuals for their own benefit to the detriment of their colleagues and the company.
  • Misrepresentation of brand(s) – too much hype – empty promises – not delivering on expectations – leads to dissatisfied clients who will alienate the brand.
  • Weak financial controls – cash flow dilemmas – over leveraged/under-capitalized (high debt-to-capital ratio) – not reinvesting a certain percentage of profits for future growth.
  • Absence of sound marketing program(s) and/or brand strategy. A brand is defined by how it behaves, from the products it builds to how it treats its customers, to the suppliers with whom it works.
  • Growing too fast and not staying on course as the company grows.
  • Lack or very little employee training & development.
  • Deficient in control systems – reactive rather than pro-active.
  • Lack of continuous improvements or complacent.

The way to solve an organizational problem is to swiftly confront the structural issues with a moral sense of purpose and ethics. It must also have preventive systems in place in anticipation of issues which may arise.

For its clients to receive stellar service, the enterprise must have its house in order. Besides structure and an efficient operation, employees should be trained and empowered to do their jobs efficiently.

Companies that disrespect their employees and shut-out clients get willfully isolated and have a short life span through an erosion of market share and significant loss of revenue. Thus, a company’s goal should place emphasis on serving its people properly and fairly. Higher morale generates higher profits – though occasionally other priorities hinder that objective, for example, self-serving behavior by certain executives.

Superman Businessman

Operational prevention: Implementation of systems and risk management

To preventing operational problems before they even occur requires anticipating them through operational intelligence. The purpose of risk management is to identify potential problems before they occur. To do so entails early and in-depth risk analysis through the collaboration and involvement of all parties involved in running the business. It’s where brainstorming occurs about potential problems regarding the product(s), service(s), market(s) etc. to search for and foresee issues, as well as create solutions in advance – eluding the element of surprise at some point in time. Risk management is comprised of: 1) Identifying, outlining and analyzing potential risks; 2) A course of action in handling the identified risks, as well as the implementation of risk control/elimination plans when/where necessary.

Business leadership should contemplate allowing constant flexibility to adjust strategy when necessary if the initial one isn’t effective.

There should be continuous checks and balances – especially with regards to internal financial controls through various procedures implemented to reduce errors or possible embezzlement by staff. Trust but verify ought to be the organization’s mantra and actual implementation.

Perhaps you can consider a risk analysis software such as a SAS platform whose practical use offers best practices to help the company establish a risk-aware culture through various enterprise risk models and forecasting. We note examples of aircraft pilots who diligently prepare prior to a flight – or ship captains making their plans prior to voyages at sea.

When all is said and done – avoiding pitfalls

Companies with inept leadership usually fail in the first or second year, but even established companies can stumble badly when they outgrow the capabilities of the founding team. According to statistics, as the latest available numbers from the two U.S. government statistical agencies responsible for providing data about new businesses illustrate, The Census Bureau and the Bureau of Labor Statistics, five years after new establishments were founded (1995, 2000 and 2005 respectively), 50%, 49 and 47 percent of them (correspondingly) were still in operation.

To be a successful and sustaining entrepreneur requires vision, strategy, execution and constant diligence – along with plenty of sacrifice. A new generation of young entrepreneurs think the road is smooth and a fast track to easy wealth. Obstacles and sacrifice are part of the deal. Harnessing opportunity and overcoming challenges on a daily basis to top the competition is constant work. These conditions are true no matter what the sector of business engagement or company size.

Enterprises spanning a wide array of industries, have earned distinction as “well-” or “best-” managed” by demonstrating business excellence through a meticulous and independent process that evaluates their management abilities and practices – by focusing on innovation, continuous training, brainstorming and caring for their employees’ well-being – as well as investing in meeting the needs of their clients.

Well-run companies thrive no matter what and learn from their mistakes – making certain they don’t repeat them. However, never give failures a second thought. There are no dress rehearsals in business either.

Onwards and upwards!

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